The European Central Bank will announce the reduction of its Covid-related stimulus in December, four analysts told CNBC amid an economic improvement in the euro zone. In the United States, the Federal Reserve has already signaled it is likely to start tapering before the end of the year. Chairman Jerome Powell said last week that the U.S. economy is at a point where it does not need as much policy support as had been the case in the wake of the pandemic, though the pace at which asset purchases will be reduced is yet to be decided.
And in the euro zone, a similar announcement could be just around the corner. “My guess is that they will probably do it in December,” Gilles Moëc, group chief economist at AXA Investment Managers, told CNBC on Wednesday. The ECB is meeting on Sept. 9, but analysts think the central bank will wait a few more months before announcing what it will do about its Covid-related measures.
In addition to having new forecasts on the table, Chiara Zangarelli, European economist at Nomura, said the ECB will also want to see what happens with the pandemic in the coming months. But as things stand, she said, “it would be hard even for the dovish” members of the ECB to postpone an announcement on tapering beyond December. ECB Chief Economist Philip Lane also said in an interview last week that “September is very far away” from the current conclusion date of its Covid-related asset purchase program, thus suggesting an announcement on tapering could take yet a few more months. Market players are monitoring key data releases to understand how the ECB might react.